Daniel Gross tweeted this blast from the past :

flashback: 2 years ago this week, Michael Boskin penned WSJ op-ed: “Obama’s Radicalism is Killing the Dow.” Market has nearly doubled since.

My post 6 months later — Michael Boskin on “The Obama Crash” — pointed out how wrong Boskin was (which is pretty true about nearly everything he has ever said)

I even used that as an example in my be objective column for the Washington Post: Why politics and investing don’t mix.

I will say it here yet again:

1. Reality matters
2. Intense emotions are very dangerous to your returns
3. Control Distractions: Focus on what matters to your portfolio
4. Do your job: You are a fund managers, not a policy wonk
5. Have a plan, then execute it

Category: Investing, Politics, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

14 Responses to “Boskin’s Bottom Tick: Obama’s Killing the Dow”

  1. cognos says:

    Love it. Politics actually means pretty much zero for portfolios, capitalism, and stock returns.

    Taxes, capital gains taxes, etc… are also near zeros. The nordic countries have pretty much boomed and busted right with us (they had less of a bust in 2008) despite very high taxes. Companies are multi-nationals with off-shore subsidiaries… they all manage taxes in a global way.

    Fear and greed and the business cycle. These matter. So does finding great products and managers and investing alongside them. Politicals and dogmatic policy issues… not smart money.

  2. large J says:

    Barry: you are very quiet on oil. what are the odds that the Arab world settles down? Why do people believe $200 is the future price for oil and perhaps more importantly what does this do to global GDP? Since 1970 oil shocks have consistently led to recessions…comments? Has anyone even looked at the founding principles of Saudi Arabia – there is no moral ground on which we as a nation could interfere…

    ~~~

    BR: My expertise in analyzing middle eastern politics is approximately zero.

  3. TerryC says:

    Unlike most of the armwavers and bullshitters, Barry well knows, “the laws of physics apply everywhere”.

  4. Orange14 says:

    As “The Inside Job” showed so well, the economics profession is one of the most corrupt around. You can usually find one from a “reputable” institution who will say anything, anytime, any place. Remember the Clinton tax deal that brought on a balanced budget AND a bull market? The same fellow travelers said it would destroy value.

  5. TerryC says:

    @ Orange14:

    An old oil industry story for you: An engineer, geologist, and geophysicist are up for the same job. At the end of each one’s interview, they are asked “what is 2+2? The engineer pulls out his calculator, punches a bunch of numbers, and says ” 4.00000.” The geologist pulls out some graph paper, a compass and protractor, makes a few drawings, and says : “it’s probably a whole number between 3 and 5″. When asked the same question, the geophysicist locks the door, closes the window curtains, puts his hands on the interviewer’s desk and whispers “what do you want it to be.”

    Replace geophysicist with economist, and you are dead on!

  6. PDS says:

    Market run has nothing to do with Obama…nor is it related in any way to the 5 items you list…

    its been all about QE’s 1 & 2…..and soon to be reharged by QE 3…or at least Mr Bernanke and POTUS hope it is

    ~~~

    BR: Exactly !

    Neither the lows nor the rally was POTUS — but dont tell that to ideological partisans like Boskin

  7. dead hobo says:

    PDS,

    QE3 … What would it take to get the thumb sitters on the FOMC on board and how would they sell it?

  8. tiger87 says:

    I think politics definitely can play a role. In 2008 I got completely out of stocks early on when I felt Obama was going to win. I then started buying in 2009, because the market became undervalued.

    ~~~

    BR: Wow, what a silly investment strategy. Your approach leads me to ask 2 questions:

    1) If you thought McCain/Palin were going to win, would you not have sold? How would that have worked out?
    2) What did you do in 2000? Did you think Bush was going to win? How did that work out?

    Fail.

  9. rbblum says:

    Upon the day of reckoning it will likely be those who were responsible will not be those who will be blamed. Yet, history will reflect that it was under Obama’s watch that the continual path of an ever increasing national deficit was foolishly being pursued while the Federal Reserve became stubbornly addicted to quantitative easing
    . . . . while astute, agnostic observers were cognizant that a surreal, fiscal and economic train wreck was unfolding in slow-motion before their very eyes.

  10. JimRino says:

    If by Killing, do you mean of functioning SEC?

  11. PDS says:

    Dead hobo…..easy answer…..oil above $100 for prolonged period would grease the skid….and that will happen

  12. mrktobserver says:

    Actually Barry, there is very good information to be had in studying the returns from political parties. A study was done on the Dow comparing the various presidential terms from 1901 to 2009. It reveals very interesting tendencies. You can read more about it here and draw your own conclusions:

    http://www.kerryonworld.com/economy/politics-and-the-financial-markets

    ~~~

    BR: Putting politics aside, the President gets far too much economic blame or credit for what happens during their term.

    These are after the fact observations from a small data set.

  13. http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=Boskin+Commission+CPI+adjustments

    Why Michael Boskin Deserves Our Contempt | The Big Picture
    … afford it ” the commission took a different route — they fabricated a series of nonsense adjustments that artificially lowered CPI by 1.1%. The Boskin Commission’s …
    http://www.ritholtz.com/blog/2010/01/why-michael-boskin-deserves-our-contempt

    Sheehan on Michael Boskin | The Big Picture
    Hedonic adjustments (purportedly, the “quality improvement” of an item) reduce the CPI. (Hedonic adjustments had been employed before the Boskin Commission, but …
    http://www.ritholtz.com/blog/2010/01/economists-serving-their-political-masters

    correct me, if I’m wrong, though, wouldn’t that be, Prima Facie, Grounds to establish a RICO indictment/conviction?

    http://legal-dictionary.thefreedictionary.com/prima+facie

    someone should, just, two-tine the dude and call it a Day..

    http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=Where+is+U.S.+Attorney+General+Eric+%22Bag%22+Holder%3F

  14. curbyourrisk says:

    You said:
    I will say it here yet again:

    1. Reality matters
    2. Intense emotions are very dangerous to your returns
    3. Control Distractions: Focus on what matters to your portfolio
    4. Do your job: You are a fund managers, not a policy wonk
    5. Have a plan, then execute it

    I say:
    1. Reality??? just what the hell reality are you talking about??? The reality is the DOW is higher, but that is where it ends. We have fudged employment data. We have fudged housing data, something you were quick to point out. We have a corrupt congress in bed with the leaders of the biggest banks…. Reality sucks!

    2. Intense emotion does kill trading…completely agree. That is why I am out of the market. Yeah I have MISSED opportunities, BUT….i sleep better at night.

    3.See #2.

    4. My job is not a fund manager, but it is to protect the interest of my company. We have done a very good job doing so……AND, we have taken the doom side of the scenario in making our decisions. We have not missed out on any business opportunites that were worth the risk. BUT, we have missed many opprotunites that would have blown up in our faces. (job well done I think)

    5. I have a plan, and I am sticking to it.